ITAT Indore Judgments — February 2017

The Tribunal held that the AO failed to establish a nexus between interest-bearing funds and the interest-free advances made. The assessee had sufficient interest-free funds available to cover these advances, thus no disallowance was warranted.

The Tribunal held that the Assessing Officer failed to establish a nexus between interest-bearing funds and the non-business advances. Given the availability of substantial interest-free funds, it was presumed that the advances were made from these funds.

On the first issue regarding exemption under Section 10(23C)(iiiad), the Tribunal found that the amount advanced was utilized for the construction of the school building, which was subsequently used by the assessee society for running its school. The Tribunal also noted that the gross receipts were less than Rs. 1 crore and the society solely existed for educational purposes. Relying on the facts being squarely covered by cited decisions, the Tribunal held that the lower authorities were not justified in disallowing the exemption. The AO was directed to treat the society as covered by Section 10(23C)(iiiad) and allow the relief. Thus, grounds 1.1 and 1.2 were allowed. On the second issue concerning kitchen expenses and Section 40(a)(ia), the Tribunal considered the assessee's claim that the recipient had paid due tax in light of the second proviso to Section 40(a)(ia). Deeming it fit to restore the issue to the AO for verification, the Tribunal held that if found correct, the relief should be allowed as per the ratio in Ansal Land Mark Township P. Ltd. Thus, this issue was remanded. On the third issue regarding the disallowance of Rs. 28,648/- out of kitchen expenses, the Tribunal found that the AO was not justified in making an ad hoc disallowance when the books of accounts were audited, vouchers and accounts were produced, and expenses were for educational purposes. Accordingly, the disallowance was deleted, and this ground was allowed.

The Tribunal condoned the delay, finding the assessee's explanation credible as the written submissions were not considered and the rectification application was not adjudicated. The Tribunal set aside the CIT(A)'s order due to violation of natural justice and restored the case for fresh adjudication.

The Tribunal held that the disallowance of expenses was unjustified as they had a direct nexus with the income. Depreciation on school buildings was dismissed, but other depreciation was allowed. Interest under Section 234B was directed to be recomputed as per sub-section (3).

The Tribunal held that the disallowance of expenses was unjustified as they had a direct nexus with the income. Depreciation on school buildings was dismissed, but other depreciation was allowed. Interest under Section 234B was directed to be recomputed as per sub-section (3).

The Tribunal held that the provision for warranty was an ascertained liability and eligible for deduction, following its own previous orders. Consequently, the disallowance made by the Assessing Officer regarding warranty provisions was deleted. The appeals concerning transfer pricing adjustments were also decided based on the specific grounds raised.

The Tribunal held that the provision for warranty was an ascertained liability and eligible for deduction, following its own previous orders. Consequently, the disallowance made by the Assessing Officer regarding warranty provisions was deleted. The appeals concerning transfer pricing adjustments were also decided based on the specific grounds raised.

The Tribunal held that the disallowance of expenses was unjustified as they had a direct nexus with the income. Depreciation on school buildings was dismissed, but other depreciation was allowed. Interest under Section 234B was directed to be recomputed as per sub-section (3).

The Tribunal held that the disallowance of interest was not justified. It relied on the principle that if interest-free funds are available, it is presumed that interest-bearing funds were used for interest-free advances, and the assessee had also offered interest income in the previous year and faced difficulties in recovery.

The Tribunal held that the disallowance of interest was not justified as the assessee had substantial own funds and the advances were made as a business expediency. The Tribunal also deleted the ad-hoc disallowance made on account of cash discount.

The Tribunal held that the provision for warranty was an ascertained liability and eligible for deduction, following its own previous orders. Consequently, the disallowance made by the Assessing Officer regarding warranty provisions was deleted. The appeals concerning transfer pricing adjustments were also decided based on the specific grounds raised.

The Tribunal held that the disallowance of expenses was unjustified as they had a direct nexus with the income. Depreciation on school buildings was dismissed, but other depreciation was allowed. Interest under Section 234B was directed to be recomputed as per sub-section (3).

The Tribunal held that the assessee had sufficient interest-free funds to cover the advances made. Therefore, it was presumed that the advances were made from these interest-free funds, and no disallowance of interest was warranted.

The Tribunal held that the disallowance of expenses was unjustified as they had a direct nexus with the income. Depreciation on school buildings was dismissed, but other depreciation was allowed. Interest under Section 234B was directed to be recomputed as per sub-section (3).

The Tribunal held that the provision for warranty was an ascertained liability and eligible for deduction, following its own previous orders. Consequently, the disallowance made by the Assessing Officer regarding warranty provisions was deleted. The appeals concerning transfer pricing adjustments were also decided based on the specific grounds raised.

The Tribunal held that the disallowance of expenses was unjustified as they had a direct nexus with the income. Depreciation on school buildings was dismissed, but other depreciation was allowed. Interest under Section 234B was directed to be recomputed as per sub-section (3).

The Tribunal upheld the CIT(A)'s decision to delete the addition. It was held that the assessee, acting merely as a power of attorney holder for the sellers, did not earn any income from the sale of the property.

The Tribunal restored the issue to the Assessing Officer for fresh adjudication, directing that the assessee is entitled to depreciation on the disallowed amount. The disallowance of 48.12% of the expenditure was upheld.

The Tribunal held that the CIT(A)'s directions under Section 150(1) for prior assessment years were barred by limitation as the appellate order was passed after the expiry of the time limit for reopening those years. Therefore, the directions were not permissible.

The Tribunal found that it could not be inferred that the assessee had not placed any material before the Assessing Officer. Given the conflicting positions and the need for fresh adjudication, the issue was restored to the Assessing Officer.

The Tribunal held that Section 40A(3) applies to computation of income under the head 'profits and gains from business or profession'. Since the nursery income was accepted as agricultural income and thus exempt, the disallowance under Section 40A(3) was not sustainable.

The Tribunal held that the AO was justified in invoking Section 145(3) due to the non-production of vital documents. However, it found the 8% NP rate excessive and adopted a 6% gross profit rate, adjusting for DEPB income.